High-risk heroics

Is Ben Bernanke a hero or villain? The chairman of the Federal Reserve was named Time magazine’s “Person of the Year” for 2009.

According to Time, Mr. Bernanke “is the most important player guiding the world’s most important economy. His creative leadership helped ensure that 2009 was a period of weak recovery rather than catastrophic depression, and he still wields unrivaled power over our money, our jobs, our savings and our national future.”

Yet many critics in Washington say he doesn’t deserve to be reconfirmed by the Senate for another four years after his first term expires on Jan. 31.

Mr. Bernanke is faulted by his foes for not spotting the economic failures that led to America’s Great Recession, for supporting excessive Wall Street bailouts and for failing to do enough for ordinary consumers.

Because of such misgivings, the vote by the Senate Finance Committee the other day to send his nomination to the floor was far from unanimous. It was 16-7, with one Democrat and six Republicans opposing him.

So much for the 2009 “Person of the Year.”

It is expected that Mr. Bernanke will be confirmed by the Senate next month when it returns from the holiday break. But an unusual level of opposition looms. Four years ago, he earned his job with just one senator dissenting.

He’s performed well, according to Time.

It calls the Fed chairman, a former professor at Princeton, “the most powerful nerd on the planet.”

In response to the economic collapse, the magazine says, “he conjured up trillions of new dollars and blasted them into the economy; engineered massive public rescues of failing private companies; ratcheted down interest rates to zero; lent to mutual funds, hedge funds, foreign banks, investment banks, manufacturers, insurers and other borrowers who had never dreamed of receiving Fed cash; jump-started stalled credit markets in everything from car loans to corporate paper; revolutionized housing finance with a breathtaking shopping spree for mortgage bonds; blew up the Fed’s balance sheet to three times its previous size; and generally transformed the staid arena of central banking into a stage for desperate improvisation. He didn’t just reshape U.S. monetary policy; he led an effort to save the world economy.”

Too much (or too little) too late?

Mr. Bernanke and Alan Greenspan, the previous Fed chairman, are seen as having believed for too long that the problems of Big Business and financial markets could be self-correcting.

This view had spurred the Bush administration to leave things alone during better times. To think that lax federal regulation or none at all was good for the nation.

Then came the fall.

Blame the unfettered and overheated risk-taking by the finance industry in a rush for profits at any cost.

Things started to unravel in 2006 with a decline in housing prices after shaky lending caused the market to bubble over. Huge losses related to asset-backed securities began to emerge in late 2007.

The problem widened last year far beyond risky mortgages to all sorts of debt speculations, many of them exotic and murky.

In September 2008, Lehman Brothers collapsed. Credit markets froze.

Which is why Mr. Bernanke did what he did.

President Obama’s decision to retain him keeps the chairman of the Federal Reserve on the hot seat.

For both of them — even more for all Americans, of course — the stakes are enormous. A full-scale recovery can’t start to begin while unemployment hovers at 10 percent, bringing despair to so many U.S. families.

It’s not enough for Wall Street and Washington to see light at the end of the tunnel. Better times are needed on Main Street.